Egyptian Minister of Petroleum Tariq Al-Mulla announced today, Tuesday, that Egypt has paid more than 80% of the arrears of foreign oil companies operating in the country, which is contrary to previous statements by the Governor of the Central Bank, Tariq Amer.
Al-Mulla added, during an oil conference, that reducing the dues contributed to “restoring confidence and positively reflected the increase in the investments of our current partners and the entry of new investors.”
Al-Mulla’s statements contradict what Amer said in a TV interview last January that Egypt had paid all the arrears of foreign oil companies ’dues.
Al-Mulla had told Reuters last July that the total arrears due to foreign oil companies had fallen to $ 900 million at the end of June 2019.
The Minister added during today’s conference that the petroleum sector contributed 27% of Egypt‘s gross domestic product in the 2018-2019 fiscal year, at a value of 1.4 trillion pounds ($ 89.3 billion).
He added that the cost of producing the equivalent oil barrel fell to $ 2.9 a barrel in 2018-2019 from $ 4.2 in 2015-2016.
The minister said that for the first time in many years, the petroleum sector achieved a surplus in the trade balance for the fiscal year 2018-2019. (The dollar
15.68 Egyptian pounds).
Accumulation of oil company dues
The dues of foreign oil companies had accumulated after the January 2011 uprising that toppled Hosni Mubarak’s rule to reach $ 6.3 billion in the 2011/2012 fiscal year.
However, these debts began to decline gradually since 2014-2015, as Egypt seeks to end its repayment at a time when it is looking to transform into a regional energy center.
Debt threatens economic reform
In January, Moody’s, the international credit rating agency, warned that the debt interest bill owed by Egypt, which is estimated at 9% of the gross domestic product during the current fiscal year, threatens the country’s economic reform and adds more inflexibility to the public budget.
The Egyptian government raised its initial estimates for the service of external debt medium and long-term due to be fulfilled during the year 2020 to more than $ 18.6 billion, according to the existing balances at the end of last July, an increase of 7.6 billion over the estimates recorded in April, amounting to $ 11.019 billion.
According to the report on the external situation of the Egyptian economy issued by the Central Bank, Egypt will pay 9.24 billion dollars during the first half of the year, and 9.35 billion in the second half.
Egypt‘s external debt amounted to $ 108.7 billion at the end of last June, according to the Central Bank of Egypt, an increase of 17.3% over the same period in 2018.
International economic institutions such as the International Monetary Fund, the World Bank and the African Development Bank account for 32.8 of the total external debt. The rest of the debt is distributed on 23.5 billion dollars in debt to the Arab countries, and the rest to the Paris Club, China and other countries and institutions.